Yesterday’s poll for the Guardian by ICM showed a big 12pt lead for the Labour party.

Labour’s rise and Tory decline in the poll was largely within the margin of error, so I wouldn’t get too happy about it. But the average still shows a healthy lead at least. This is a problem for the Tories.

Asked to choose the single most important reason for the new economic downturn during the last quarter of 2012, here’s what voters say:

29% – Debts which the last Labour government racked up to finance unsustainable spending
16% – Chill economic winds blowing in from the troubled Eurozone
21% – Banks refusing to provide loans to firms that they need to invest in their businesses
23% – The sharp cuts in public expenditure being introduced by the coalition government

It’s a shame that 29% of voters think the stagnant economy is Labour’s fault, but to say this means Labour has a problem in 2015 is silly.

That 29% may be the biggest group of voters – but it’s highly likely they are ideological and committed Tory and Libdem voters.

Those voters are most likely to blame Labour for almost anything and would never vote for the party anyway. In other words they are irrelevant to the electoral math. If that figure was 49% there would be reason for concern.

The party may be weak on the economy in other ways, but this is a poor reason to argue that.

*

On a related point – I said a few weeks ago it was highly unlikely Labour would lose support from voters for being ‘soft’ on welfare, and rejecting Tory attack on ‘shirkers’. Very few people actually pay attention to complicated Westminster debates on welfare.

The usual suspects on the right of the Labour party laughed at me. Poor saps. Who’s laughing now?

Reader comments

I’ve no doubt you’re right that the 29% blaming Labour are pretty committed Tories (with a few LibDems) but I think you miss the salient finding of this poll.

And that is that only 23% are blaming Osborne’s policies for the weak economy.

I happen to think they’re right to do so (high imported inflation and a weak EUzone are what has hit consumption and confidence, coupled with banks deleveraging) but I’m surprised to find that I am in the 77% majority who think this.

Considering that even Osborne’s biggest fans wouldn’t claim he was a well-liked politician, there have been plenty of finance mishaps (omnishambles Budget), and the media is awash with criticism of Osb (from both the left and right) it is surprising that less than a quarter of the population blame him for the weak economy.

It would help if Labour had dumped some of those responsible for driving the pre-crisis economy though the City and high personal debt. It was not sustainable. The Coalition’s policy should have been one based on maximising the tax take whilst introducing long term credit for SMEs: RBS could have been used. The size of the public sector needs to be determined in part to sustain the size of the economy not to suddenly reduce it. They and we will get into serious problems when the markets take account of the policy failure rather than seeing the GBP as a hedge against the EURO. If the BoE has to protect the GBP from rapid and radical devaluing it will be some cliff. May not be far off now.

1) To be fair Labour did attempt to move on from those associated with Brown’s tenure at the Treasury with the appointment of Alan Johnson as Shadow Chancellor.

2) The trouble with using RBS as a conduit for boosting SME lending is that back in 2008/09 when Hester took over its balance sheet was a whopping c £2 trillion. That was a huge potential risk to the UK tax payer should the US housing market take another downward turn or the world economy slip into a recession. Understandably clearing up this mess and strengthening the balance sheet was the number one priority.

Unfortunately lending to SMEs is intrinsically risky. Far more so than the residential mortgage market. After all would you lend your money to HMV, Jessops, or Woolworths, even at 15% interest rates ?

I’m not sure I share your conviction that the sentiment of the 29% should be dismissed so readily. The Tories have relentlessly pushed the “it’s all Labour’s fault” line, and it’s an easy line to push as it builds on past (pre-New Labour) consensus.

Bear in mind that the question is about the impending double-dip, not about Labour’s time in office, and alarm bells should be ringing.

Labour’s biggest problem isn’t economic competence, but the perception that they are incompetent. That stems less from the Tories and far more from the supine media.

The media ignored the Tories’ silence when GB nationalised and bailed out the banks. They failed to note that while Labour was too light on regulation, the Tory prescription would have been even lighter regulation. They were complicit in building a false ‘deficit denier’ stick to beat Labour with and, later, when it became clear that Darling’s (supposedly too weak plan) was actually stronger than Gideon’s actions faced with a weak economy, they permitted the Tories to continue to blame the previous Government while simultaneously pointedly asking “what would Labour do?” (a question they failed to seriously ask Cameron, even weeks before the election).

They are now working themselves up to hailing growth of any kind as some kind of Tory success story, and they seem quite willing to wait until 2014 too. All that should worry Ed Balls and Ed Miliband. It certainly worries me.

While there’s certainly a party-political aspect to it, it’s not quite that simple: there are actually [1] more Labour voters blaming the previous Labour government than Lib Dem voters doing so (as an absolute number, not as a percentage of all voters for that party, of course)

1)The trouble with Brown’s bailing out of the banks (and Tory silence/confusion as what they would have done) is that the bail out is, especially with hindsight, seen as pretty cack-handed. It was a bail out less of the banks and more of the bankers. As Iceland showed letting the banks going bust (yet protecting savers and the payments system, which was possible), letting shareholders and bondholders take 100% losses, then nationalising the banks and instututing new management and pay scales would have been far better in the long run. As it was the continued seven figure bonuses and business as usual at the banks was a direct result of proper action not being taken in 2008.

2) Well, Tories would argue that they would have instituted not less regulation per se but better regulation. And who knows what would have happened had the Bank of England not had its regulatory role (which had worked well for 300 years) taken away from it and given to the useless FSA.

But the political point is that, unfortunately, no one really cares what an opposition party “might” have done ten years ago. I don’t recall Labour ever saying about Black Wednesday and the collapse in the aura of Tory economic competence that “Oh don’t blame Norman Lamont, we were arguing for exactly the same policy, and it was just unlucky that it didn’t work out as planned due to the unforseen consequences of German reunion and its impact on the DM.”

For some curious reason, the costs to the budget of all those wars tends to get overlooked. In 2007, before the financial crisis, general government expenditure in Britain as a percentage of national GDP was marginally higher than for Germany and lower than for Denmark, Sweden, the Netherlands, France etc.

I am afraid I have to disagree. Polls show that Labour is neck and neck with the Tories on the economy which is not good enough. The fact that 29% of people asked still think that the weakness of the economy is Labour’s fault, and only 23% think that it is the Tories’ fault is a major problem. Other polls show that around 50% think that Labour will come into office and rack up loads of debt. It’s an uncomfortable reality that we have to face, one that even many Labour voters have been saying. If Labour does not get ahead on the economy now, then we will be in hung parliament territory come 2015.

What makes that 29% even worse is the complete failure among this group to realise that the financial crisis (in this country at least) was not caused by Government debt. In fact, anyone paying attention to the growth in debt could see quite clearly that the substantial majority of it (over two-thirds) is *post* recession. But lets not let things like temporal causality get in the way of ideology, eh?

The point isn’t so much the increase in spending before the crash but that this increase in spending was paid for by a super normal tax base blown up with revenues from a hyper active City, property market and consumer debt.

So instead of running a 2-3% deficit leading up to 2008 (which wouldn’t be the end of the world under a normal macro environment, especially if cash spent on useful stuff) there should have been a realisation that these buoyant tax revenues weren’t sustainable and that a little more restraint and risk awareness might have been in order.

I think this argument fails on a couple of levels. The first is the notion that pre-crisis revenues were in some way exceptional; they weren’t, at a pre-crisis peak of 36.2% of GDP they were a little above the 35% average that we’ve seen over the last 50 years (well within 1 standard deviation).

Although I agree that Governments should avoid running deficits during periods of good growth, when you run the numbers on the impact of that pre-crisis deficit spending in the post-crisis world, it doesn’t support the notion that this is a major causal factor of the current problems.

Let’s assume that Labour’s pre-crisis deficit spending has stayed with us right up to the present, adjusted for inflation. On that basis, you can blame Labour “irresponsibility” for an additional £163 billion of debt post-crisis. That leaves you with £720 billion of post-crisis debt left to explain. A good chunk will be down to the crisis itself, and I would argue that the remainder is the result of bad fiscal policy on the part of the current Government.